Political Frictions Rise

Stocks on Wall Street ended off on Monday in trading that was altogether calm and tempered, investors focusing on the rise in political risk both in the U.S. and on the geopolitical sphere. In the U.S., Trump rattled Capitol Hill, accusing former president, Obama, of eavesdropping on his phone calls during the election campaign, twitting about a “Nixon/Watergate” plot making use of state intelligence services to gain political capital. In similar fashion, across the Atlantic, the strengthening of fringe party candidates in France and Italy raised concerns about the long-term durability of the Euro bloc.

In summary for the day, the Dow Jones shed 0.2%, the S&P 500 backtracking 0.3% and continuing the daily pattern we’ve seen since November ’16 with weakness in the morning and then the market boasting strength in the afternoon. The NASDAQ fell 0.4%, the Russell 2000 dropping 0.7%. The dollar strengthened to a small degree, with a slight change seen in gold and crude weakening on the background of concerns about Chinese growth.

Netflix (NFLX) soared 2.3% on the background of a UBS analyst upgrade, the brokerage pointing to a rise in expectations for Q1 subscribers, newfound momentum surfacing despite the weak pipeline of exclusive broadcasts.

The issue of Snapchat (SNAP), now 3 days old, started trading yesterday by jumping 5.5%, though very quickly traded in the red, heavy selling pressure dragging the stock down 12.3% by day’s end. The fall in SNAP came on the heels of an article in Barron’s that noted that its “shares look ridiculously valued” and that even if one were to opt for an aggressive growth forecast (the company is currently unprofitable), it’s “hard to justify more than half the current stock price.” As of Monday, not a single senior analysts has given the stock a “buy” rating. Furthermore, a group representing large institutional investors has turned to different index providers like MSCI, the S&P 500 and the Dow Jones, asking them to block SNAP and any other stock from entrée into the indexes as long as they don’t grant shareholders voting rights.

The camera company, GoPro (GPRO) fell 7.9% after being downgraded to “sell” from “neutral” by Goldman Sachs, the latter’s analysts noting rising competition, difficulties launching new products and the rate at which they’re burning up their cash reserves.

And now, back to Trump. Besides Democrats’ claims that Russia interfered with the elections by penetrating the U.S. government’s computer network, and Trump’s allegations that Obama had wiretapped his phone conversations during the elections, it seems that the political divide is expanding. That certainly casts some doubt on the narrative that after the elections, Trump’s tax reform, fiscal spending, and deregulation platform are going to sail through congress and prop up growth already this year.

Moreover, Trump signed the second incarnation of an executive order yesterday forbidding entrée to citizens of states supporting terror, the list including 6 Middle Eastern Muslim countries including Yemen and Syria, which will most certainly lead to further political jousting.

On the background of the political tug of war, the Fed stands to hike rates again next week, the major economic figures continuing to be weak. After the Dow Jones reigned supreme last week, breaking past the 21,000 point level, it seems that on the background of the extreme bullish sentiment, stocks are vulnerable to a price correction that’s been a long time in coming. The last time the S&P 500 recorded a daily drop of over 1% was in October of last year.

On the S&P 500, 16 stocks rose to new 52-week highs, 7 dipping to new yearly lows; on the NASDAQ, 61 stocks recorded new 52-week highs, 63 falling to new yearly lows.

Trading volumes on U.S. exchanges came to 6.18 billion shares, beneath the 6.89 billion average over the last 20 trading days.

Tuesday: The market’s on standby, awaiting February’s official employment figures which will be released this Friday; in the meantime, players will mull over the latest U.S. trade balance numbers. Will the figures cause Trump to start twitting on the topic of trade? That’s something, after all, that could raise renewed awareness among investors. Concerns have it that Trump will impose a special, high import tariff on products from outside the U.S. from places like China and Mexico, while likewise deciding to open up negotiations for new trade deals, while could set off a trade war and threaten the pace of global growth.

The U.S. trade balance figure for January will be released today before opening. The deficit is likely to expand to $47.3 billion. In December, for the sake of comparison, the deficit was $44.3 billion.

Earnings reports are expected today before opening from DKS, MOMO, and HRB. After closing, be primed for the results of BG and URBN.

Index Last Daily change R2 R1 PP S1 S2
DJX 20,954 (-0.24%) Down          
SPX 2,375 (-0.33%) Down 238.72 238.22 237.61 237.11 236.50
Nasdaq 5,849 (-0.37%) Down 131.37 131.05 130.63 130.31 129.89

 

Tuesday’s Hot Stocks: CRM, SNAP, THO, MOMO, DKS

IPOs: None

Have a great trading day!

Economic Calendar

 

DAY TIME (EST) Event Forecast Impact
Monday 10:00 Factory Orders 1.0% Medium
Tuesday 8:30 Trade Balance -$48.5B Medium
Wednesday 8:15 ADP Employment Change 180K Medium
Wednesday 8:30 Productivity-Rev. 1.5% Medium
Wednesday 10:00 Wholesale Inventories -0.1% Medium
Wednesday 10:30 Crude Inventories Low
Thursday 8:30 Export Prices ex-ag. Medium
Thursday 8:30 Import Prices ex-oil Medium
Thursday 8:30 Initial Claims High
Friday 8:30 Nonfarm Payrolls 188K High
Friday 8:30 Unemployment Rate 4.7% High
Friday 8:30
Average Workweek
34.4 Medium
Friday 14:00 Treasury Budget Medium

 

Earning Calendar

 

Symbol Company AM/PM Day
CASY Casey’s General Stores, Inc. PM Monday
THO Thor Industries, Inc. PM Monday
DKS Dick’s Sporting Goods, Inc. AM Tuesday
MOMO Momo Inc. AM Tuesday
NAV Navistar International Corporation AM Tuesday
URBN Urban Outfitters, Inc. PM Tuesday
CIEN Ciena Corporation AM Wednesday
UNFI United Natural Foods, Inc. PM Wednesday
SIG Signet Jewelers Limited AM Thursday
PAY VeriFone Systems, Inc. PM Thursday
FNSR Finisar Corporation PM Thursday
ULTA Ulta Beauty, Inc. PM Thursday
YPF YPF S.A. PM Thursday

 

 7.3.2017

Today’s Picks – Day Trading!

Symbol Breakout Breakdown Momentum Momentum
ADBE 120.57   EDU IONS
EDU 52.37   FMI CAR
CAR   32 CNCE CSIQ
NAV   25.73   SNAP
DG   72.30   RRD
        HTZ

 

New York Strategy Swing

# Date Stock Long\

Short

Statues Data Close Profit\

Loss

1 1.2.2017 AKAO Long Close 16.2.2017 +11.29%
2 2.2.2017 DATA Long Close 6.2.2017 +13.09%
3 7.2.2017 GNC Short Close 9.2.2017 +3.26%
4 9.2.2017 PG Long Close 13.2.2017 -0.63%
5 9.2.2017 ATI Long Close 14.2.2017 +2.42%
6 13.2.2017 STX Long Close 16.2.2017 +1.26%
7 14.2.2017 CXW Long Close 23.2.2017 +4.53%
8 15.2.2017 ZEN Long Close 23.2.2017 +1.60%
9 21.2.2017 AA Long Close 23.2.2017 -1.17%
10 22.2.2017 SCOR Short Close 24.2.2017 +0.78%
11 23.2.2017 NTAP Long Open   +3.09%
12 27.2.2017 DATA Long Close 1.3.2017 -2.14%
13 6.3.2017 LBTYK Long Open   +1.20%
14            
15            
16            

 

Today’s Picks – Swing “New-York Strategy

No.1 –    FRED

Company Name Fred’s
Entry Point 16.39
Stop Area 15.79
1st Target 16.85
Swing Target 19.14
Avg. Volume 1.94M
Sector Services | Discount, Variety Stores
Earning Date 22 Mar
Risk Rate Normal
Risk\Reward Ratio 4.58:1

 

No.2 – NAV

Company Name Navistar International 
Entry Point 25.73
Stop Area 26.55
1st Target 25.10
Swing Target 23.86
Avg. Volume 623K
Sector Consumer Goods | Trucks & Other Vehicles
Earning Date 7 Mar
Risk Rate Normal
Risk\Reward Ratio 2.28:1